Predications ahead of Osborne’s spending review

November 23, 2015 5 minute read

Predications ahead of Osborne’s spending review

Predications ahead of Osborne’s spending review

The Chancellor of the Exchequer, George Osborne is due to make his autumn statement this Wednesday, which this year coincides with the spending review. It is best described as a mini-budget which gives Osborne further opportunities to set policy, but also for the opposition to try to rebut and challenge what the government is doing. Most of what is to be said by Osborne will have been leaked beforehand, however it is interesting too look at how the opposition parties will attempt to frame their counter-narrative to government policy. The stakes could not be higher for those involved; Osborne bases his potential leadership chances on economic reliability; the Labour party need to fabricate economic credibility, fast; the Liberal Democrats could use it as a springboard in their battle for relevance and the SNP could exploit it as a further example of how they are distinct from Westminster. This article will examine the posturing of opposition parties ahead of the Autumn Statement.

John McDonnell is the Shadow Chancellor and so will lead the fight against the Conservative Party. He must break a cycle of scandals and poor decisions and Wednesday is the perfect opportunity to do so. He outlined is plans on Friday for “Socialism with an iPad.” A rather enigmatic phrase that includes commitments to embracing new technology, spending 3.5% of GDP on infrastructure and escaping the “trap of short termism.” He looks to create a

“prosperous society built on sustainable growth, and predicated on the values of fairness, equality and social justice”

He argues that the UK state should be more strategic with its spending, looking at the long term trends and to increase investment in areas that will yield real benefits. He briefly referred to the £400bn cash pile companies are sitting on arguing that the tax system must change to give them incentives to invest wisely, it was unclear as to how draconian this would be. However he still appeals to his traditional routes when he refers to

“bringing workers and unions together to advise policy-makers on the future direction of the economy.”

(Source: Huffington Post)

McDonnell has shifted away from his ‘anti austerity’ message and has gone for a more refined approach. Arguing instead the Britain should be developing new technologies and industries; McDonnell comes across as lot more positive and is attempting to create a vision that the electorate, and his party, can really buy into and get behind. It is unclear how these promises will resonate with the public, especially when coming from a member of ‘old labour.’ However it does take aim at one of Osborne’s weaker spots, the productivity gap that is threatening the UK economy.

The Leader of the Lib Dems, Tim Farron also focused on productivity but took on the issue of the deficit head on. I was lucky enough to be at his keynote speech at the IPPR on Thursday where he laid out his future economic vision. The three key building blocks it was built on were; taking the long-term view, backing entrepreneurs and investment in infrastructure. He argued that borrowing to increase capital spending actually created ‘sustainable debt’ as the returns on such investment would be greater than the initial cost. Whilst this is understandable to economists, the distinction between capital and current spending is sometimes a hard case to make to the electorate as a whole. On entrepreneurs he suggested that the Tories where “cooperate capitalists” and that the Lib Dems would back the small to medium business that were the “backbone of the economy.” Here he looks set to try and paint the Conservatives as the party of big business and establishment rather than that of the businessman. In a similar way to McDonnell he praised the roles of tech centres and technology in creating real wealth and jobs for the UK economy. He described universities and technology hubs as the “spring board of the economy.” In what is an economically sound vision, Farron is desperately trying to make the Lib Dems relevant again.

The problem is that the Lib Dems have very little influence in the House of Commons, although in the Lords they still hold power as the Tax Credits episode showed. Farron does make a compelling economic case he can have no effect on reality without votes and MPs. His strategy in the short term is to work with MPs from other parties. Talk of working with a coalition of centrists from across the Labour and Conservative party is for now unlikely. However as centrists from Labour get more exasperated with Corbyn and the likes of Heidi Allen MP become more vocal, it is not impossible that such a scenario could happen, although it remains fanciful.

Osborne needs this to be a success. Recent figure show that the deficit is at its highest level in six years, although employment and growth is increasing there are still many economic yardsticks that he can be beaten with. Although still the bookie’s favourite, other polls show him trailing behind Boris Johnson and Theresa May. The opposition parties from across the floor will focus on poor productivity, the ever-rising debt and will undoubtedly make the moral case for a reduction of the cuts. It will be a pivotal day in parliament on Wednesday. It is a chance for McDonnell to be taken seriously, for Labour’s vision to be properly articulated. For the Lib Dems it is a chance to become relevant once more. Their ‘fight back’ will be won or lost based on Farron’s ability to win over the centre voters who may shy away from Corbyn’s Labour. There is all to play for.

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